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What about Lemonade?

The news yesterday was that stealthy startup Lemonade is now open for business in New York. Congratulations to Lemonade for their launch!

We’re still not sure how peer-to-peer is different from “mutual” but today we learned that one of Lemonade’s differentiators is that they’ll pay unused premiums to charity, instead of keeping it as profit or returning it to members as a dividend. There’s some indication, too that this model could be a fundraising vehicle for groups like your little league, your school’s PTA, your city’s SPCA, a local homeless shelter.

We like that.

We’ve long experimented with a similar affiliate program we call “Compare for a Cause“. (We’ll donate $10-25 to your favorite charity when you refer someone who gets a comparison.) Supporting social safety nets is a core part of our business philosophy. But we also support dividends for mutual insurance members and corporate shareholders. Lemonade’s intention, some may call it a disruption, could be the elimination of unused insurance premium as a source of corporate profit. We’re indifferent. Comparity has no stake in that part of the business. Kudos for Lemonade if they figure it out.

There’s a lot we still don’t know about Lemonade. They were prominently funded a year ago by venture capitalists and have been in stealth mode until now. Because we are also out fundraising our Angel round we get questions about companies like Lemonade from potential investors all the time.

To Comparity, Lemonade is like any carrier. We want them in our model on our comparisons. Insurance is about diversity (by definition) and choice (by necessity). We’re think underwriting defines target customers for carriers and believe that it’s in everyone’s interests to have as many carriers in the market as possible so shoppers can shop. Today that doesn’t happen. Insurance customers can’t shop and compare easily without providing lots of detailed, personal information to multiple companies and dealing with a bunch of solicitors. Meanwhile, insurance carriers are left to use dragnet marketing techniques like mass media ads and buying contact info even though they are searching for highly specific customers. Insurance agents on the front lines sort through then “toss back” 95% of those leads for preventable reasons like not being able to insure.

That’s where Comparity comes in. We’ve created a broker-less marketplace where insurance carriers like Lemonade (and Nationwide, Allstate, Farmers, Traveler’s — over 30 others) can meet their ideal customers without having to pay for the opportunity. It’s the same marketplace where insurance shoppers can apply to and compare multiple insurance companies at once through a single, anonymous application and a simple, side-by-side comparison of quoted policies. We like to say that we’re simplifying insurance shopping so everyone wins.